Real Estate Blog & Blogging » Broker Profitability

What is Your Plan for 2011?

Matt Jones — Mon, 29 Nov 2010 17:33:18 +0000

As 2010 comes to a close, let me ask you a question: How did you do? Are you happy with your business this year? I don’t know about you, but I’m not. It has been a very stressful and trying year for many and it certainly has been for me. But, next year will be better. Right?

Don’t count on the economy being any better, so says the experts. And from what we are hearing, it looks like there is another big wave of foreclosures coming and another drop in home prices before we can begin any legitimate recovery. Who knows. Maybe the experts are right. But I believe next year will be better. Maybe not for everyone, but it will be for me.

How can I make that bold assertion in the face of substantial evidence that the economy and specifically the housing sector will not recover next year? Am I just being positive? Mind over matter? While I believe that our attitude has much to do with our outcome, I must tell you that I’m not just being optimistic. There is a reason I am convinced that next year will be better for me.

I am going to make it better. I am not a passenger in my business. I get to drive. I don’t have to be carried along wherever the economy or our industry decides to take me. Why? Because I get to drive. And so do you, if you want to. How do I get to drive? I’ll show you how. I plan my next year before it happens, and you should too. If ever there was a time to be in the driver’s seat, it is right now.

There is an ancient proverb that says failures don’t plan to fail; they simply fail to plan. Sadly, many agents have thrown in the towel after investing months or even years learning this business. Many have had to leave a business they love because they failed to prepare properly.

It’s been said, “A goal without a plan is just a wish.” I’ve met hundreds of agents who had a goal of business success, generally, but were absolutely without a clue as to how they would get there. Again, very sad. The fact is that every single agent should have a business plan — after all, we are running a business. And I’m going to show you how I go about it. Maybe it will help you as you think about next year.

What if I told you that you could actually know the step-by-step series of actions that are required to meet your personal business goals? What if I told you that you could actually control your real estate destiny instead of real estate controlling your destiny? What if I told you that you could drive the car instead of being a passenger? Would you believe me? Okay, well would you like to believe me?

Well, I’ll share my methodology with you, and you decide. If afterwards you believe me, great. If not, you won’t hurt my feelings. If you build and follow your own plan the way I’m about to share with you, you will be successful. Wildly successful! Even in this horrible business climate. It’s really that simple. No kidding.

Now I’m not talking about a business plan like you would prepare to get a bank loan. I’m talking about an action plan that will tell you exactly, step-by-step, what you need to do every single day in order to achieve your goals. No stress. No endless wondering if you are doing the right thing. Just the simple recipe to hit your own business goals.

My method of planning is very simple. It has only two steps, and both steps are essential. Many agents will try to do step one, and skip step two. Others will try to skip to step two and neglect step one. Neither way will work. To be successful using my method, you need both steps.

Step One — Vision.

Before you can begin any journey, it’s important to know where you’re going. Simple as that. Someone once said that, if you don’t know where you’re going, any direction will do. Well, I prefer to choose my destination. And having chosen where I’m going, I can then set out to build a systematic, step-by-step plan of how to get there.

Without a destination, how will you know when you arrive? You won’t. If you don’t have a specific, quantifiable goal, any result will do. If you don’t have an objective, any outcome will do. You must have a destination — a finish line — a finite, measurable, clearly defined objective. Why? Because, without one, you’re only wishing, and planning is not wishing.

I believe in the principle of vision. In order to achieve something, you have to see it first — not in the sense of seeing a physical reality, but of seeing the end result in your mind’s eye. And I’m not talking about some mind-over-matter scheme of somehow psyching yourself into super-achievement.

What I’m referring to is the simple principle that anything you create (in this case, your business) will be given life once you can see it clearly in your mind. The more clearly you see it, the likelier you are to achieve it.

In the 1950s Roger Bannister, a medical student at Oxford University, had a very specific goal: to break the 4-minute mile barrier in running. In those days, the 4-minute mile was considered by most athletes and the physiologists of that day to be unachievable. Nobody had ever done it. Therefore, it must be impossible.

But Roger was not convinced by the doubters. In fact, he was determined to achieve it – to break the 4-minute mile! So Roger approached his mission scientifically and deliberately, setting an intense workout program for himself with specific training scheduled for every single day. As he trained, he achieved several intermediate goals. Then one day it finally happened.

Roger ran the mile with a time of 3:59.4! Not only did he break the 4-minute barrier, but he broke through a psychological barrier as well. John Landy, considered one of the great milers of that era, had never gotten closer than within 1.5 seconds of the 4-minute barrier before. Yet within 46 days of Roger’s breakthrough, Landy surpassed the record with a 3:57.9, and by the end of 1957, 16 other runners had broken the 4-minute miles barrier.

Why could everyone run faster all of a sudden? Because after it could be seen, it could be achieved. What set Roger Bannister apart from the rest was his ability to see his goal clearly, even though it had never been accomplished before. He focused on his own vision and not on what he was told by those around him. He was able to accomplish the seemingly impossible because he allowed himself to see it very clearly, and then he methodically and scientifically took the steps required to achieve it.

Here is why I shared that story with you: It’s important to have as much detail as possible in your vision. Take the time to imagine your ideal real estate practice. Picture all the details. Dream until you see it all in your mind’s eye. Think of it as writing and starring in your own mental movie.

Now take the time to watch that movie again and again until you’ve memorized it. The more clearly you can picture your vision, the more likely you are to achieve it. Let me give you some practical examples of vision-driven performance. When I began in real estate, I set several objectives for my first year. I decided that I would list a property a week, and I told the agents in my office what I intended to do.

Initially I was struggling, but soon I was ahead of my plan, so I adjusted it to list 100 properties during my first twelve months. You know what? I failed at that new goal. I listed only 74. But in my first calendar year I listed 114 properties. Could I have done it without “seeing” it first? I don’t know. I doubt it. Vision drove me to succeed.

Here’s another example. I was determined to become the top listing agent in our market during my first year. I first saw this vision clearly in my mind, and I used it to drive me until I accomplished my objective in less than six months. Could I have become the top listing agent in our market without having that vision? Maybe, but I doubt it. I do know one thing for sure: I did accomplish my objective, but only after I’d first seen it in my mind’s eye.

Last year in December I made a new business plan. Because my different business lines had all been dependent on other people I was starting to feel like a passenger and not a driver. I had lots of agents in my brokerage business but most were not producing. I had plenty of technology sales, but many of those agents were not paying me. I understand that many of them were struggling.

Don’t get me wrong, I fully understand given the current state of our industry, but my point is that I was entirely dependent on those other agents. So my vision last year was to replace that “dependent” revenue with “independent” revenue. I clearly saw myself building a base of revenue that was independent. Then as the other came in, it would be gravy.

In other words, I made a deliberate plan to control my own destiny. I focused on the business lines that I could control. I went from very unprofitable paperback books sales to profitable e-book sales, and we hit all-time sales records. We ramped up our advertising revenue as well.

I could go on and on, but what’s important is that, if you can see it, you can achieve it. So take the time to get a clear picture of where you’d like to see your business in a year. Two years. Five years. Dream big! Imagine those goals as already a reality. And take the time to see the details.

When you see everything clearly, write it all down so you can refer back to it and use it to refresh your mind. I promise you that, if you do this, you’re on your way to becoming a success. In my next article, I’m going to share with you how you turn this vision into reality. But don’t skip the vision. If you can see it, you can achieve it. If you can’t, you won’t.

Is “The Tank” the Next Active Rain?

Matt Jones — Mon, 22 Nov 2010 21:13:53 +0000

I am seldom surprised. This one truly surprised me. When we launched our brand new agent think tank and discussion forum, The Tank, just a few days ago we thought a few agents would join. But what happened, we were not even remotely prepared for.

In just a few days over 200 separate topics by hundreds of members! In a word — AMAZING! And the posts are very thoughtful and well articulated. Not a single negative post to date and I must confess, I am very surprised. Many are starting to say things like “this is the next Active Rain”! Wow!

Here are just a few recent quotes from agents participating in The Tank:

You get the idea. If you haven’t had a chance to check it out yet, I highly encourage you to visit. You’ll be amazed at the quality of the topics and content. Real, working agents are sharing their best tips and secrets, and not holding anything back.

An afternoon in The Tank is like reading several good books on real estate, only it’s totally free. If you haven’t visited, here is a link: http://BlogMattBlog.com/bbpress

Take a few minutes and you will see what all the hubbub is about. In a word — AMAZING!

The New Ultimate Listing Presentation (Part 20)

Matt Jones — Mon, 15 Nov 2010 13:20:37 +0000

The Human Element.

As I mentioned before, having the best technology in the world — having an endless supply of new inbound customers — won’t help you at all if you don’t have the basic skills needed to turn those opportunities into closed transactions. That’s where the human element comes in.

I believe that there are several fundamental things that a Realtor® must have if he is to become a master listing agent. Just as the technology is crucial to success, so are these basic “human” factors.

First let’s talk about education. In The New Ultimate Listing Presentation I’ve given you some very specific things to learn that will make you the best agent for the job. Let’s be honest here: most of us haven’t done a lot of studying since we left school, and the temptation is to try to get by without having to do the work. I know that. But that’s all the more reason to make yourself do it. Average agents won’t. You want to be a top agent!

I’m going to make a confession here. I don’t really like to study either, but that’s what gives me an advantage. My peers never crack a book, while I read about two books a week. Do I do it because I like to read? NO! I do it because I need to continue to push myself to become all that I can become.

If I am to be the top listing agent in my market — if I really want to be the best — then I have to make myself do those things that I don’t necessarily want to do. Remember how your mother used to make you eat spinach? Well, I say eat your spinach.

It’s a hassle to do the market research required to become a top agent, but this is your career. I promise you that there are agents calling me every day asking for help because they really want to go to the next level. Those who put in the work invariably succeed. Those who don’t, won’t. They won’t become top agents. It’s as simple as that. Winners make it happen, and losers make excuses. It’s all about you. Do you really want this? If you do, I’m absolutely convinced that you can achieve it.

The other key human factor is your governing values (or personal philosophy). It’s not my desire to be preachy here, but I believe that out of our inner self flow the issues of life. We influence our success or failure by how we bring ourselves to the process. And I believe that the value system we use to govern our businesses has a direct impact on the outcome of our lives. And I believe that there are a number of principles that we can follow to ensure our success.

1. The Principle of Vision. The most important principle, in my opinion, is vision. By this, I mean being able to see that which is not, as though it were. I believe that we’re made in the image of a creative God and as such are inherently creative by nature. And it’s that creativity which gives us the opportunity to build something truly phenomenal.

Most of us don’t take the time to allow a clear vision to be formed in our hearts. But the more detailed our vision, the greater our chances of achieving it. The scriptures teach that, as a man thinks in his heart, so is he. Allow yourself to develop a vision for what could be and take the time to see it clearly in your mind’s eye.

2. The Principle of Confession. Taking our vision and beginning to articulate it is the key to bringing it to reality. Just as God’s instrument of action in creating the world was “speaking” (i.e. God said, “Let there be light”), the way that we transfer vision to reality is by speaking it. I never miss an opportunity to share my vision with people around me. Every time I get a chance, I articulate it to employees, agents, recruiting prospects, and peers.

Why is confession so important? Because our subconscious mind believes what it hears. That’s another reason to be careful what you’re listening to. If there are negative people around you — people who tell you that you can’t do something — it’s important that you let them know you don’t want to hear their negativity. If you must, find someone else to spend time with! You alone control what your subconscious mind listens to, so make the message good.

3. The Principle of Reciprocity, or Sowing and Reaping. We’ve all heard the old adage that what goes around comes around. It’s true. Scripture teaches us that, “Whatsoever a man soweth, that shall he also reap.” In other words, give, and it will be given to you. This principle is true in two different ways:

a) Quantity. To the degree that you give, to the same degree you’ll receive. “He that soweth sparingly will reap sparingly.” The more you do to help others, the more your kindness and generosity will come back to you. Giving abundantly is the key to success. I know of lots of agents who never volunteer at their local Association, who never take the time to help a new agent, who never help those in need. What a shame.

b) Kind. You will reap in kind with your sowing. If you plant apples, don’t expect to grow bananas. If you want to reap success, you need to sow success for those around you. If you’d like to receive happiness, then make sure that you don’t sow seeds of “ugliness” for those around you. Whatever seeds you plant will ultimately come up. Make sure you’re planting the right seeds.

4. The Principle of Greatness. If we want to be great, we must be servants. The way up is down. This is contrary to traditional wisdom, which teaches us that, if we want to get ahead, we must put down our competition. I marvel at the crab-bucket mentality that so many agents have. Many would rather pull someone else down than actually see what they can learn from a competitor. How tragic! If you want to be great, serve those around you.

5. The Principle of Leverage. Two are better than one. You can create leverage through synergy. Team building is an example of this principle. By enlisting others, we can build something much bigger than ourselves. In fact, we can build a whole that’s greater than the sum of the parts. Don’t be afraid to work with other people: often that’s the key to going to the next level.

6. The Principle of Stewardship. If we’re faithful in the little things, we will be entrusted with bigger things. If we waste the resources that we’ve been given, we shouldn’t be surprised that we lack the resources that we need to grow when opportunities come our way. I know of many agents who have all the “toys,” own a huge house, drive the most prestigious car, and yet live from deal to deal. Again, what a tragedy.

7. The Principle of Responsibility. To whom much is given, much will be required. God holds us accountable for that which he has entrusted us. If you’ve been given success, you have the opportunity and the responsibility to use it wisely. This principle is related to the principle of stewardship, but different. One is the flip side of the other. Stewardship is the key to getting success. Responsibility is the burden of that success.

8. The Principle of Perseverance. We must endure trials and hardships in order to succeed. There is a refinement of character that comes from perseverance. Show me a successful person, and I’ll show you someone who has gone through many personal trials. And when those trials come your way, learn to see them as an opportunity to persevere. I know that, in my life, nearly every time I feel as if the situation is so bad that I can’t possibly endure it, I hold on anyway. Invariably the solution to my problem comes right after I’m the most tempted to give up.

9. The Principle of Thankfulness. Nothing is less attractive than a whiner and griper. Nobody wants to be around that kind of person. Well, there’s a principle that thankfulness is attractive. Of course, when everything is going well, it’s easy to be thankful. But if you find yourself in a tight spot, determine to be thankful anyway. Lack plus thankfulness equals sufficiency. I personally believe that this is the mechanism that demonstrates to God that we truly trust Him. If we’re thankful, regardless of our situation, we attract other people to come along and help us.

10. The Principle of Rest. The more talented you are, the more you’ll be tempted to “force” things. And while forcing an issue often provides a solution, it’s rarely the best solution. If you feel pressured to make a decision, don’t make one. Bite your tongue, and say, “No, thanks.” Often the best action is no action — rather simply to wait patiently for the right solution to emerge from the quietness.

Final Thoughts

So there you have the entire listing presentation that’s made me one of the top listing agents in the country and earned my clients and me lots of money. Now you have the big picture, from the technology tools to the actual presentation to the underlying philosophy that’s been responsible for my success. Hopefully, you can see that this is not simply a “listing presentation” to memorize: it’s a way of doing business. I hope that you’ll try it.

I know that, over the last few years, we’ve had hundreds of other agents who’ve decided that this approach could provide a missing ingredient in their practices. Many have gone on to grow as fast as or even faster than I did. We have quite a few agents who’ve grown so fast that they’ve had to recruit additional agents. Many have grown their personal production while taking more time for other activities.

One thing is certain: every single agent who has actually tried to do what we taught him has experienced some degree of success. It works because it is based on the law of supply and demand, which is a fundamental economic law. Just like the law of gravity — this approach works everywhere.

Well, now you have the secrets that allowed me to list 114 homes in a single year, all at 8% or more. Now you know exactly how I grew from a single agent practice to the owner of the largest brokerage in our market, all in three short years. It wasn’t magic. It wasn’t luck. I didn’t do anything that you can’t do if you decide you want to do it. The ball is in your court. Will you decide to go for it? I hope you will.

The New Ultimate Listing Presentation (Part 19)

Matt Jones — Mon, 08 Nov 2010 10:05:07 +0000

Putting All The Pieces Together

In the previous chapters we’ve discussed all the various elements or components of what I believe to be the best listing presentation you’ll find anywhere. I’ve determined not to give you just the listing “pitch”, but rather to give you the entire presentation — from the initial preparations you must make, to the underlying theory, to the preparation required to become the top listing agent, to my actual presentation itself: the actual what-to-say and how-to-say-it.

In this and the final chapter I will help you assemble all the pieces. I admit that I’ve given you a lot to chew on already. Not a day goes by that we don’t get emails from agents asking us to explain some of the mathematics or to discuss how the approach might work in their market. If you’re a bit overwhelmed, don’t feel like the Lone Ranger! I hear those questions a lot. But remember: nothing worth having is easy to get.

If this listing approach were really easy to learn, everyone would be doing it. However, the fact is that it’s not. While the concept itself is the very picture of simplicity, putting it all together takes a commitment from you the agent, probably unlike anything you’ve ever been taught. But again, I promise you that, if you’ll take the time to put it all together, you’ll be listing at a premium every single time. You’ll be the top listing agent in your market — maybe even in the state or country.

My approach really comes down to two parts: the technology element (assembling the right tools) and the human element (having the knowledge and the philosophical base). If you have the technology element and yet lack the knowledge and underlying values, you won’t become a master listing agent.

By the same token, if you have all the education in the world and yet fail to acquire the technology tools critical to compete in this new age of real estate, you can never become the dominant agent in your market, and you may find yourself struggling just to survive. Becoming a master listing agent requires balance.

The Technology Element.

In the earlier chapters, we discussed how the Internet is rapidly becoming the predominant method for home searches today. From only a small percentage of searches a few years ago, as many as 94% of buyers and sellers today are turning to the Internet like never before.

Now more than ever, it’s critical for any agent to develop a comprehensive web-marketing strategy. After all, if the Internet is where the customers are looking for real estate, then the web should be where you focus your marketing efforts. Right? Right.

We already covered how developing a comprehensive Internet marketing strategy, doesn’t require spending a lot of money. Instead, it’s important that you invest in the proper pieces. Many agents adopt a marketing policy of “ready, fire, aim,” rather than “ready, aim, fire.” The result of such a policy is frustration.

Frustration from spending a lot of money and receiving little, if any, return on your investment. Frustration from wasting a lot of time trying to do what all the “experts” advise, only to figure out too late that those so-called experts haven’t got a clue about online marketing. Frustration from making a good-faith investment of time and money, only to be let down again.

For less than the cost of running an ad in a homes magazine for a single month, you can put together a marketing solution that will return as many as 100 new inbound real estate customers! For most agents, that same money spent on a magazine ad will return 8-10 leads.

What’s even better is that, by using technology to capture the leads, not only do you get more information, but you can also get your leads 24 hours a day and not only when you happen to be able to answer your phone.

For the first time ever, instead of having to go to multiple vendors and piece together the tools you need to be successful in today’s real estate climate, you can get it all in one place. Our company has it all in one place.

Our technology called an LCM Gateway® is available as a stand-alone tool through our website http://LCMsuccess.com. For less than the price of your morning coffee each day, you can have state-of-the-art LCM Gateway lead capture technology and best of all, for the first time ever there is no long term contract and no activation fee. It is really a no-brainer, and it pays for itself with the first lead you generate.

But if you have a large team or brokerage and need an enterprise application with all the essential technologies, we have that too. Pipeline-i® — Intelligent Technology — the ultimate Virtual Office technology package for today’s working agent. Check it out.

Now, in one application you’ll get our LCM Gateway®, state-of-the-art lead capture technologies for both web and telephone, our Agent SimpleSite®, a customer-centric personal website, our Client Management software, and our mobile Virtual Assistant® application for your smart phone.

Pipeline-i is the single most powerful Virtual Office real estate platform available today, at any price, and is complete with hundreds of training articles, videos, calculators, business planning modules and much, much more.

And instead of having to piece it together, Pipeline-i gives you a seamless and perfectly integrated Virtual Office, allowing you to operate your real estate practice wherever you have your computer and an Internet connection, whether that’s a coffee shop, your home office, or your car.

Now you can communicate with other team members, share leads, track your progress, write a business plan, generate new customer leads, refer business, log client communications, take online training, and schedule activities for yourself or team members, all from one command center.

Powered by our Pipeline-i Virtual Office technology, you’ll go weeks without ever coming by the office. Why? Because your real estate office is virtual. And that makes you more productive at what you do best — working with clients.

Either way, you really owe it to yourself to check out our technologies. Don’t worry, nobody will try to sell you anything. We don’t even have a sales force. But our technology really is that good, and it could literally change your practice forever! It has for many other agents before you.

There really is no excuse not to have all the customers you can possibly service. You can generate your own fresh, inbound leads for only pennies per lead. No kidding! Here is what I mean:

Our typical agent, nationwide, spends only about $250 for advertising. That’s all! The result is an average of 92 leads, nationwide, for a marketing cost of only $2.71 per lead. And for that tiny investment, our agents not only spend less money on marketing than their competition does, but they generate more business than they can personally handle, allowing them the freedom to grow a team or to refer business to other agents for a fee.

Imagine what it would be like for your own business to have twenty new leads every week — and each for less than the cost of a cup of Starbucks! Would that change your business? Would it take the pressure off? Would it allow you to be a little choosier about which customers you work with? Would it give you enough “breathing room” to begin to expand your business? Could you see how simply having a steady inbound stream of customers would allow you to run your practice more like a business?

If you answered “yes” to any of those questions, you truly owe it to yourself to look into getting the right technology. You don’t have to spend a lot of money to have state-of-the-art lead capture and client management technology. And having the right technology will set you up for being the top listing agent in your market because you will have more opportunities than anyone else.

The New Ultimate Listing Presentation (Part 18)

Matt Jones — Mon, 01 Nov 2010 09:16:36 +0000

Introducing My Secret Weapon!

If you recall from the last chapter, we were in the middle of making our presentation to a seller. We’ve discussed the two approaches — the traditional or price approach and the traffic approach. We’ve helped him understand why the traffic approach works and why it sells houses in half the time while netting more money.

Next I tell the seller that if he’s like most of my clients, he’ll want to know how I intend to market his property and what the current market conditions look like. I’ve had sellers tell me that they wanted to wait until spring (or some other time) to put their homes on the market because they had been told that the market was slow and few buyers were out shopping. I love it when this happens.

I ask my seller if he has a computer handy. We go to his computer, and we log onto the Internet. I then take him to my LCM Gateway, and we go through the process of registering to see properties online. We receive our user name and password and log into the website to view the MLS.

Just about the time we get to the search (IDX) page, I get a text message on my phone. I show the seller that my registration has just come in within seconds. I explain that if this were an ordinary inquiry, I would immediately call the shopper back and introduce myself, see if I could help him find what he was looking for, and offer to send him new listings by email.

Next I would tell my seller that today’s customers want instant information, and because of the technology I use I can actually provide that help when the home-shopper needs it — right now! Then I pull out my secret weapon: my home-buyer notebook.

In it I have the names of all the Internet customers who have come through my LCM Gateway in the past three months. Each customer is neatly printed on a page by himself, complete with his name, phone numbers, his email address, and any notes I’ve written. Each page is literally a resume for that buyer, and it’s very impressive.

Imagine the reaction of your listing client when you show him — when you actually put into his hands — the names and phone numbers of hundreds, maybe thousands of home-buyers with whom your team is currently working.

Imagine what goes through his mind when he is holding your notebook that is four inches thick, and it’s page after page of real people who are actually looking for homes in your market!! It’s easy to convince the seller that, while the process may be slow for some agents, it’s anything but slow for your team!

How do you think your customer will react? I’ll tell you how: he’ll stand there looking at your home-buyer notebook in disbelief, except for the fact that he just saw your system work! In his heart he knows it works, and he knows instantly that nobody can do a better job selling his home. All he says is, “Where do I sign?”

Finally, I’d tell the seller about some cases where I’ve used the traffic approach and had great results. Remember: Jesus taught in parables. Why? Because people love stories. A story can take the vaguest idea and make it imaginable by making it real. Here are a few of my favorite stories that I’ve used countless times in the past.

Through my website, a client who was a licensed broker in Boone, North Carolina, approached me one day last year. His parents had passed away, and because of his real estate experience, his siblings had chosen him to help sell the family home. So he called the largest company in our market, which happened to be Coldwell Banker, and listed the home for $64,900.

Over the course of two years, Coldwell systematically reduced the price to $59,900. But even though it was a very nice little house, the seller hadn’t received a single offer on it during the course of the listing contracts.

When I explained my idea to the broker, I could see the light come on in his mind! As an agent, he intuitively knew that this approach would work, so at my suggestion we raised the price to $70,000 and the commission from 6% to 8%. (The co-op was half.) Well, within a month we had received three offers! The first two we turned down, but the third was a full offer, and we accepted it.

Still, we had one more hurdle to get past: the appraisal had to support the sale price. As it turned out, the appraisal came in short, and my client had to sell the home for $69,500 and do some minor repairs that amounted to less than $600 (and probably would’ve had to be done with any sale at any price).

So after raising the price $10,100 and then paying an extra $1,390 (the 2% extra commission), my client netted $8,210 more money and got the absolute top dollar for his childhood home. Even more importantly, we accomplished in under ninety days what he’d failed to do in two full years: we got offers and were able to command the maximum price because of the traffic generated by the higher commission. Was he happy? He was ecstatic! And so was I.

Here’s another story you’ll love. Again, I had a client approach me through my website. (Are you noticing a trend here?) This fellow was very frustrated because he’d bought a brand new home, closed on it, and was having to make two house payments every month. He’d tried to sell the home FSBO; and although he’d shown it a lot, no offers had materialized. Then he listed it with a local brokerage, but still no offers and only a few showings.

After the listing expired, I went to see him and I showed him my approach. He decided to try it. We raised the price from $79,900 to $86,000, and immediately had a surge of showing traffic. Exactly seven days later he sold the home for the full asking price of $86,000.

Just like in the previous story, we anxiously waited for the appraisal, but this time it went through without a hitch. To this day, my client thinks that I’m a genius and he sends me business every chance he gets.

Now let’s do the math on this one: the additional commission cost the seller $1,720, but the additional price he was able to command was $6,100, so his net benefit was $4,380. That’s over 5% more money than using the traditional approach. Best of all, the house sold almost immediately!

I could go on and on with these stories, but I’ll share just one more. This client was one of those know-it-all people. As usual, I shared both approaches with him. His initial reaction was that he’d never heard of the traffic approach and was skeptical because he had a problem with the high commission.

No problem. He decided to split the difference and list the home at 7%. (Let me remind you that we’re in a 6%-or-less market.) We waited. Because we had listed at 7% we had a slightly-better-than-average number of showings, but nothing outstanding and no offers for about four months.

Eventually, the client began to get frustrated (not a new thing to many of you listing agents, I’m sure) and he called me to ask what I thought he should do. He was in a hurry to sell the home and he had a lot of equity, so we’d listed it for $146,000. I asked him if he remembered what I’d suggested when we first listed the house, and he said, “Not really.”

I suggested that we raise the price to $156,000 and the commission to 8%. He’d been considering reducing the price and was naturally stunned when I told him to raise it.

Well, to make a long story short, we closed not long afterward! He was very thankful for my getting him top dollar, and I can promise you that he’ll never sell another home the traditional way. He realizes that bribery works!

Quickly looking at the math, you can see that we raised the commission 1%, or $1,560, and we commanded $10,000 more for the home and sold it almost immediately. Hmmm. Coincidence? I don’t think so!

Now, did I do anything differently in any of those cases? Absolutely not! I advertise all of my listings exactly the same. I don’t show any preferential treatment, regardless of price, commission rate, or pressure from the client. What sold those homes and many more just like them was the commission.

But it gets even better! What’s the first thing we’re all taught to do when a home doesn’t sell? That’s right: lower the price. But what I generally do is convince my client to raise the commission. We’ve raised the commission as high as 12% (!) to sell a home that otherwise would’ve sat vacant forever. It’s amazing what a lot of showing traffic will do for even the worst dog of a house.

So there you have the listing presentation that’s made me one of the top listing agents in the country and earned my clients and me lots of money. And now that you have the “ammo,”. Next, I’m going to give you the “gun.” In the next and final chapter, we’ll help you put it all together so that you can become the dominant listing agent in your market!

We’ll take the technology component, the advertising and marketing component, the preparation component, and the listing presentation and give you the strategy to assemble it all in a way that will make you virtually impossible to beat. Until then, work on getting your technology in place if you haven’t already done so. The first key to being the top listing agent is having lots of opportunities.

The New Ultimate Listing Presentation (Part 17)

Matt Jones — Mon, 25 Oct 2010 12:31:02 +0000

What if you could take a listing over the phone?

Yes, you read it right! In fact, I’ve taken roughly 85% of all my listings over the phone! And you can do the same thing using this approach! No kidding! Remember, the seller just wants to get the most money for his home in the least amount of time. The last thing he wants is your PowerPoint presentation on his kitchen table.

Okay, so you have the listing appointment and the information you need going in: the value of the home, the seller’s motivation, his time frame, and his expectations. And besides having the CMA and the market data close at hand, you also have the home-buyer notebook we talked about in a previous chapter.

More on this in a moment. Now, however, it’s time to nail the presentation. Before we get into the actual interchange, though, let’s talk about what the seller is expecting (and what virtually every other agent in your market is gearing up to give him).

The seller is expecting you to come in and tell him how great his house looks. He’s expecting you to tell him how terrific your company is (and it may very well be!). He’s expecting you to tell him how great an agent you are and how many zillion dollars’ worth of property you’ve sold. He’s expecting you to tell him his kids are cute. He’s expecting you to tell him he needs to fix this and that.

He’s probably sold a house before, he’s already talked to another Realtor®, and/or he’s talked to friends who’ve been through the process. So let’s assume that he plans to interview several agents, as many sellers are doing nowadays. The single most powerful thing you can do is surprise him. Remember: you want to look at what everyone else is doing, and then do the exact opposite. What do I mean?

Other agents will talk about themselves. You need to talk about the seller. Other agents will extol the virtues of their companies, and in nebulous terms they’ll explain how they plan to sell the house. You need to talk about different strategies for selling the house and then show the seller exactly what the process will mean to him in terms of DOM and selling price.

But back to the listing presentation. When you arrive at the home, quickly introduce yourself, and then tell the seller that you’re very sorry, but you don’t have a lot of time, and you want to make the most of what time you do have. (He’ll be thrilled because he’s been expecting this ordeal to go on for hours!) Now, let’s hope you get lucky, and he says, “I’m talking to ‘Agent X,’ and he says he’ll list the house for 5%. How much do you charge?”

At this point I’d tell the seller, without hesitation, “I try to get 100%” — and then I wouldn’t say a word. After about ten seconds (which feels like an eternity!), he’ll usually start laughing. Then I’ll politely say, “Regardless of what anyone may tell you, there are only two parts of selling your home that are completely under your control: the commission and the selling price.”

“And when it comes to commission, the commission rate you choose to pay will largely depend on the type of selling strategy you decide to use. Do you know what I mean by that?” Now most sellers will either take a wild guess or they’ll say no, which is perfect. (What he’s just now done is set me up!)

“Mr. Seller, here’s what I mean. There are 1100 Realtors® in our market, and I guess what that translates to is that there are 1100 different ways to sell your house. But the truth is that all those different approaches really boil down to just two different strategies: you can sell your house by price, or you can sell it by traffic. Does that make sense? (At this point, either he’ll say no, or he’ll guess wrong.) Well, here’s what I mean.”

“If you were to go to [insert the name of the biggest local bookstore] and find the real estate section, you could see lots of different books on how to be a top agent. And each of those books would teach you one single way of selling houses. It’s what many call the ‘traditional’ approach because nearly all agents use it, and have used it for years. It’s the way we are all taught to sell houses. I call it ‘the price approach’ because it uses the price to sell your house.”

“Here’s what I mean by that. A house isn’t like a loaf of bread or a share of stock. You can’t go to your computer or call someone on the phone and get a price for it. The price on a house is much more subjective. In other words, the value is somewhere within a ‘reasonable range.’ Let’s say, for example, that some imaginary house is worth $200,000.”

“It’s not actually worth $200,000 — it’s worth between $190,000 and $210,000, depending on the motivations of the buyer and the seller. Now, if you list the home for very much over $210,000, everyone will pretty much agree that it’s too high. And, by the same token, if you dropped the price below $190,000, most people will agree that it’s a great deal.”

“The way we’ve all been taught — all of us real estate agents — is to convince you, the seller, to list your house at the low end of that ‘reasonable range,’ or in other words, I would recommend that you started at $190,000, or at the low end of the range. That way, we can the price to motivate a buyer to write an offer. See? We’re selling your home by price.”

If the home doesn’t sell in a month or so, we’re taught to go back to you and ask you to reduce the price, telling you that the market has spoken and that your house must not be worth as much as we’d initially hoped. Then you agree to reduce the price, and we wait. In another month, if the house still doesn’t sell, we reduce the price again. In other words, we cut off your arm, an inch at a time, until we eventually suck in some bottom-feeder who’ll be happy to ’steal’ your house.”

“Now, there’s nothing wrong with this approach. It will definitely sell your house, but it’s an expensive way to go about it.” This is when I generally pause for effect. Then I say, “But what I’d do if I were you, is use a different approach. I’d use what I call the ‘traffic approach’. Let me explain.”

“If it were my house, we’d raise the price about 10%, or up to $210,000! And then we’d set aside about 2% of that increase to use as a ‘bribe.’ So if we raise the price by 10% and then subtract the additional commission of 2%, that leaves us with 8% more money in your pocket. Here is how it works.”

“If we were to look in the MLS right now, you’d find about 300 or so homes with more or less the same square footage, the same number of bedrooms and bathrooms as your house. Now, when an agent has a buyer who’s looking for that kind of house, he’s not going to show all 300 of them. Guess what he’s going to do?”

“First, to keep his broker happy, he’ll probably show the client any homes listed by his own company that happen to fit the bill, and after that he’ll probably choose a small handful of other homes to show to his client. You can’t really blame him — with the price of gasoline today, and the low commissions most agents earn, you would probably do the same thing.”

“Here is why this strategy works so well: It will ensure that your home gets put on lots of show lists. That’s all it’ll do… but that’s enough. Here’s why. I don’t know of any agent who’d deliberately try to talk his customer into buying a house that wasn’t right for him, simply to make a higher commission.”

“But, on the other hand, I don’t know of any agent who wouldn’t hope for his client to choose the home that paid the best. Realtors® are just regular people, and if they can make more money doing the same amount of work representing their clients, you can bet they will.”

“Do you remember the movie Field of Dreams? The famous line from that movie was, ‘If you build it, they will come.’ Well, in real estate, if you bribe them, they will come! The fact is that, in order for your home to stand out in a sea of other homes for sale, there must be something ‘outstanding’ about it.”

“Using the traditional or price approach, what stands out is the price. Maybe not immediately, but eventually. But using the traffic approach, what makes your house stand out is it’s the abnormally high commission. It’s really very simple.”

Then I’d tell the seller that I’m equally comfortable using either approach (which I am), but I’d be less than honest if I claimed that the two methods had similar results. The fact is that the traffic approach has historically sold our clients’ homes in about half the time and netted them significantly more money in the process!

At this point in my presentation I pull out my secret weapon. We’ll discuss that secret weapon and I’ll share the rest of my listing presentation in the next chapter, so you won’t want to miss it!

The New Ultimate Listing Presentation (Part 16)

Matt Jones — Mon, 18 Oct 2010 13:03:53 +0000

The Actual Listing Presentation

In the previous chapters we focused on how to gather an unending supply of listing leads. We discussed becoming the best agent for the job. We mentioned the necessity of learning market statistics, and how and where to find them. We discussed how you can increase your credibility and power by arming yourself with this basic and relevant knowledge.

Next we determined the best way to build an accurate CMA, or comparative market analysis, and then we touched on the theory behind my listing presentation. If you’ve been studying the information, you know how and why this presentation works.

Now, I will show you how to present my listing plan to a seller client. I would encourage you to print it out and read with a pen or highlighter in hand, and to take notes. You should expect to review the material again and again until it has been fully absorbed. And if you do, I promise that you’ll be listing properties at 8% or more — every time!

A day in the life of a listing agent.

I want you to pretend that you’re the listing agent in this story. It may not be a true story for you yet, but it could be. It’s been true for me countless times. Imagine that it’s a Thursday morning. You’ve just come into the office and noticed a CMA request that arrived from your website overnight. Along with it, so did eight buyer leads.

If you’re like most agents, that kind of good news doesn’t happen often; but, in my case, not a day goes by that I don’t receive one or two CMA requests from potential sellers and fifteen to twenty buyer leads — and all because of the technology that I use to capture traffic from my website.

But once again I’m getting sidetracked. We’ve already talked about the lead capture gateway and how it’s a critical piece of your arsenal for generating an endless supply of listing and buyer leads. For now, let’s stick with the listing presentation.

Okay. So it’s Thursday morning, and you have a new CMA request in your inbox. The first things you do are to pull up the tax value and print out the tax sheet, which will tell you a lot about the property and the CMA request. Using the tax records and the appreciation rates for that area, you determine the approximate value of the home.

Next you log into your MLS database and pull up all the closed comparables for the seller’s subdivision, with the approximate size and number of bedrooms and baths. There are twenty-one comparables to use and only one obvious distressed sale, so you eliminate that one from the average. After finding an average for the other twenty, you print out the comps in a one-liner format and note the “average” price on the page.

Next you pull up all the active comparables listed in the MLS (three, in this case), average them, print out the query, and write down the average price. If there are not any active comps, you might want to use the “list price” average for the closed comps, since the list price was the price they would show if they were “active” listings today. The idea is to include these so you don’t inadvertently skew the average price downward.

Now add these three numbers that you’ve written down, and divide by three. Now you have your average sale price. Multiply it by 105% to determine the high end of your reasonable range. Then multiply it by 95% to give you the low end of the range. What you’re doing is adding and subtracting 5% from the average price or mid-point. In a matter of minutes, you’ve completed a very thorough CMA that’s beyond scrutiny.

So now you call the seller and thank him for visiting your website. You tell him that you received his home-valuation request and that you’re in the process of compiling data to determine the home’s value. I generally tell the seller that I’ve seen very nice homes and some pretty bad homes, and some in the middle, and I’d like to know where in that range his home is.

I generally ask the seller to rank his home on a scale of one to ten; one being a bomb had gone off, and ten being a brand new home. Then I ask him to pretend that I’m Stevie Wonder and to give me a verbal tour of the place, since I’m not actually there to view it.

I allow him to take me from room to room, all the while I’m asking him for specifics about the home’s curb appeal and other possible attractions. After touring the house, we next “go” outside, where I have him talk me through the yard, the exterior paint, the roof, the overall condition, the immediate neighbors’ homes, and the landscaping.

Then I generally say something like, “Gosh, that sounds like a really nice house! Why on earth would you want to sell it?” The response I get is very important because it can provide me with the seller’s motivation and, often, his time frame.

Next, I try to determine whether or not the seller has a realistic grasp of the home’s value. To do that, I then ask him if he has any idea what he would like to sell it for, in a perfect world. Sometimes sellers aren’t completely practical about these things (I bet you already knew that!), but generally they are. And if a seller isn’t being realistic, he will likely believe that his home is worth much more than the initial CMA would indicate.

In that case, I proceed with something like this: “Wow! You must have a really nice house. I’m looking at every single home that’s been sold in your neighborhood during the past year, and I’m not seeing anything within $15,000 of that price. Can you help me understand what features your home has that make it stand out so much?”

Many times the seller will tell me that the house down the street sold for that much even though it isn’t nearly as nice as his. Generally, however, the seller down the street just didn’t want anyone to know that he had to sell his house for much less than he’d been asking. But now that you have the comps in your hand, you can tell the seller exactly what a house sold for, and sometimes that fact is all you need to move the seller into reality.

On the other hand, sometimes your potential client’s home actually is worth more than you would’ve expected, so you also need to be open to what he tells you. On those rare occasions, you should be prepared to tweak your CMA a little. Having asked him up front what his expectation is, however, keeps you from the embarrassment of not including a legitimate feature that adds value to his home. You don’t appear to be trying to undervalue the seller’s home.

Now that you know the seller’s motivation, his time frame, and his opinion of the property’s value (it could even be that he had a recent appraisal, which he’s now using to test you), you can tell him that you’ll complete your research and then call him back with your valuation. Simply set up an appointment, and either call or visit in person.

In the next chapter we’ll discuss how to make your listing presentation — whether you choose to do it in person, or take the listing over the phone like I have done many times. Either way, you’ll want to know what to say when you talk to the seller and we will cover that next, so you won’t want to miss it!

Best New Real Estate Business Models

Stefan Swanepoel — Mon, 11 Oct 2010 18:00:19 +0000

Swanepoel Trends Report Opens Research for New 2011 Report

Ever since the introduction of the Internet in real estate in 1995 speculation about a new business model for the real estate market has been rampant.

There was a surge of innovation in the late 1990s touting disintermediation, reduced commissions and a more automated and streamlined transaction by using the Internet. Most of that did not materialize as a result of the now infamous “dotcom” crash of 2000. Most of the new business models at the time disappeared although a few interesting companies made it through to the new century.

Then came Web 2.0 and the flood of innovations caused a second wave of new business models to emerge. This time the focus seems was more about quicker customer services, virtual offices and reduced fees to agents.

NEW BUSINESS MODELS

What we do know for certain is that the real estate business is amidst significant change, and that the traditional model born in the 1960s and 1970s is under severe consumer, Realtor® and technology pressure to reinvent itself. Some franchisors and independents will comply and many will not. During the process many new models will push forward in an attempt to find their new niche and place among the next generation of leading real estate companies.

As always, the Swanepoel team at RealSure continues to track, research and share change with the industry. We are working on detailing in the 2011 edition of our annual report (publication date February 1^st, 2011) a comprehensive study of the Top 10 best new business models started after the introduction of the Internet into our industry.

YOUR HELP

We are of course already aware of the usual suspects but can never be certain as to who should be otherwise included. So we need your help. Feel free to add to the bottom of this post on Facebook, ActiveRain and RealBlogging companies you think we should research or alternatively email us at Trends2011@RealSure.com.

A comprehensive discussion and summary of the 10 best new real estate models will be included in the 2011 edition of the Swanepoel TRENDS Report (RealSure; 160 pages, February 2011). The Swanepoel TRENDS Report is the leading annual trends report on the real estate brokerage business. For more information and testimonials visit www.RETrends.com.

The New Ultimate Listing Presentation (Part 15)

Matt Jones — Mon, 11 Oct 2010 09:11:39 +0000

A Lethal Listing Presentation (continued)

In the previous chapter we covered the traditional listing approach in detail. If you recall, I call it the “Price Approach” because it relies on the price to sell the home. Now allow me to introduce you to a brand new approach — the Traffic Approach.

The Traffic Approach

To understand the traffic approach, we need to turn our attention again to the “reasonable range.” Real estate is entirely different from liquid investments with absolute values. For instance, anybody can look up a share of stock and immediately see its current price. But because values are subjective in real estate, there tends to be about 10% flexibility in the price range. It’s what economists call price elasticity.

Consider a home that’s valued at $200,000. It’s not worth exactly $200,000! It’s really worth between $190,000 and $210,000. If the price drops below $190,000, nearly everyone will agree that the house is a good deal; and if the price goes above $210,000, nearly everyone will agree that the property is priced a little too high. However, within the “reasonable range” there is little price resistance.

Here’s how the traffic approach works. Instead of listing the home at the low end of the range ($190,000), you raise its price to the high end of the range ($210,000). But that creates a problem. The problem? Now there’s no compelling reason for anyone to show it or buy it.

Okay, here’s the secret weapon: you raise the commission by 2%! What you’re doing, effectively, is “bribing” agents to include your listing on their show lists. What I do is raise my commission from 6% to 8%, and then I raise the price from the low end of the range to the high end, or about 10%. The client then nets about 8% more money before any negotiations!

Sometimes, not often, the appraisal knocks the price down a bit. When that happens, it’s usually a minor adjustment, and then the seller has the option of lowering the price to match the appraisal — or else the deal, as written, falls apart. The buyer also has the option of paying, out of pocket, the shortfall in the appraisal or canceling the deal if there’s an appraisal contingency. When that happens, the client knows that he got the absolute top dollar for his home.

Now, I know that almost any Realtor® will immediately say, “I never look at the commission when I’m working for a buyer.” I’ve had many agents tell me as much. But I don’t believe that noble-sounding claim because statistics clearly indicate that it’s not true.

I don’t know any agent who would willfully sell a buyer client a home that wasn’t right for him; but if there are sixty homes in the market that generally match the client’s criteria, and if three of those homes pay higher commissions than the rest, it’s certainly not unethical to make sure that those three properties end up on every show list.

Moreover, there’s nothing wrong with hoping that your client chooses to buy one of the three. If he doesn’t, no big deal; but if he does, you just got a big bonus! Let’s not forget, we practice real estate for a living. It’s how we pay our bills. It’s how we support our families. There is nothing wrong with focusing on what pays you the best. In fact, it’s the right thing to do.

One of the questions I’m often asked is why I don’t just offer a bonus to the selling agent. Once again, the answer is simple. Every buyer’s agent knows that if he doesn’t present a full offer, the first money to come off the table will be the selling bonus. Since most homes don’t sell for full offers, the selling bonus doesn’t happen very often, so the buyer’s agent can find himself torn between not getting the bonus and not representing his client.

If the buyer’s agent advises his client to offer less than the listing price, he knows that his bonus is most likely gone. On the other hand, if he encourages the buyer to pay the listing price, he’s probably not fully representing the buyer’s interests. For that reason, the selling bonus is often a disincentive rather than a legitimate incentive.

So now you have the theory behind my listing approach. The big picture, if you will. So what’s next? In the next part, we’ll be discussing the listing presentation itself, and I believe you’ll find it to be the most powerful listing presentation you’ve ever seen! Until then, work on getting your technology in place so you have an unending supply of inbound leads. And focus on learning all your numbers and becoming the best agent for the job. There’s never going to be a better time to start than right now.

The New Ultimate Listing Presentation (Part 14)

Matt Jones — Mon, 04 Oct 2010 12:00:21 +0000

A Lethal Listing Presentation

Now let’s take the pieces and put them together into a “lethal” listing presentation. For quick review, what are the pieces? The first piece is knowing your market statistics so that you’re truly the best agent for the job. Becoming the market authority. Then the next piece is knowing the value of the subject property so that you can get the top dollar for your seller client. By knowing how to prepare the ultimate CMA, your foundation is complete.

Beginning the process without laying this foundation simply won’t work. It’s absolutely critical that you go through these first two steps before you learn the listing presentation, simply because the presentation builds on this foundation! If you’re just skimming through this approach so you can get to the “magic words” to say, you are wasting your time. This approach is not about having magic words. It’s about creating a magnetism that will attract your listing clients to you. That comes from building the foundation.

Without building your foundation on solid ground, you’ll instead be building your presentation on quicksand, and you won’t be able to list properties using this powerful and unique method. Why? Because you won’t have the most important element of any sale: the believability factor.

This listing approach is counter-intuitive. It is going to fly in the face of what 95% of the other agents are telling your client. As such, it demands that you have credibility. If you don’t have credibility, the listing approach will never sell because you’re asking the client to place his faith in an approach that, in all likelihood, he’s never heard of before. Take the time to build the foundation.

Last year there were more than 1.1 million Realtors® in America, so I guess you could say that there are 1.1 million ways to sell a house. But the truth is that there are really only two ways to sell a house: you can sell it by price, or you can sell it by traffic. Every other sales method is a subsidiary of one of these two. We’ll explore the two different approaches at length and discuss how they differ and how one of them will yield far better results for your client while making you more money.

The Traditional or Price Approach. I’ve read dozens of books — probably hundreds of books — on the subject of real estate. Many of these books speak of the importance of listing real estate, and all of them describe nearly identical listing approaches, with only slight differences. Now, the reason for all this sameness is obvious: it’s the way listings have been done since the beginning of real estate. It’s the old “if it ain’t broke, don’t fix it” thing. Well, I’m here to tell you that it is broke! If you expect to make a lot of money in real estate, you need to determine what everybody else is doing and then do the opposite.

Okay, here’s the basic formula for the “traditional” or “price” approach. As you’ll recall, we talked earlier about building a CMA, or comparative market analysis, for your client. The traditional approach teaches us to find the “reasonable range” of value and then try to list the property on the low end of that range. That’s why we used closed comparables only, and not active listings as comparables. It’s why we aren’t taught to adjust upward for the list-to-sale ratio. We start as low as the client will let us.

If the home doesn’t sell within a month or so, we’re all taught to…what? You got it! To ask for a reduction in price. Then if the property still doesn’t sell, we lower the price again, and again, and again, until eventually we find a buyer for the place. Think about it: we’re selling the house by price. We’re using the price as our marketing tool. That’s why we continue to lower the price, or wait for appreciation in the market to lower the price for us, until the house eventually sells.

One of the reasons this approach works well for the agent is that it places the entire burden of selling the home on the seller! Another reason for using the traditional approach is that the agent doesn’t have to spend a lot of money marketing the house. He doesn’t have to spend a lot of time or effort devising a marketing plan or promoting the property because the price is doing the selling for him. There’s no doubt that this approach will work, of course: it’s been working for decades with good and bad agents alike. However, there are a few drawbacks to the traditional approach that are seldom mentioned.

First and foremost is the agency issue. It’s your job as the listing agent to represent the seller’s interests, which include getting the absolute top dollar for the property. However, most agents don’t get top dollar when they use this approach, and the reason is as simple as supply-and-demand. When there are fewer buyers competing for a home, the sale price may need to be discounted substantially in order to attract interest. In economics-speak, “with a fixed supply and a scarce demand (i.e. fewer buyers), prices drop.”

Another drawback to using this approach is lack of speed: several months may pass before the traditional approach begins to have an effect. In the process, the home often becomes stigmatized. After several reductions, it’s not even shown to potential buyers because it’s been on the market “too long” and is now assumed to have something wrong with it. If the agent starts the process too high and then reduces the price too slowly, the home becomes very difficult to sell at any price.

Many times, listing agents unwittingly become de-facto buyer sub-agents. Even though I don’t know a single listing agent who would intentionally sell out his client, it’s entirely too easy with the traditional listing approach to help the buyer rather than the seller. And, yes, I realize that my judgment may sound harsh, but if you’ll honestly examine this method, you’ll have to agree that, very often, it doesn’t yield the best results for the seller.